Major bank fined £29 million over 'shockingly lax' controls

Starling Bank has been fined an eye-waterung £29 MILLION for "shockingly lax" financial crime controls. The challenger bank has apologised after the City regulator said a lack of checks "left the system wide open to criminals and those subject to sanctions".

The Financial Conduct Authority (FCA) said the challenger bank had grown quickly but “measures to tackle financial crime did not keep pace with its growth”. Therese Chambers, joint executive director of enforcement and market oversight, said: “Starling’s financial sanction screening controls were shockingly lax. It left the financial system wide open to criminals and those subject to sanctions. It compounded this by failing to properly comply with FCA requirements it had agreed to, which were put in place to lower the risk of Starling facilitating financial crime.”

The watchdog said on Wednesday that Starling's measures to tackle financial crime did not keep pace with its growth, and it had repeatedly breached a requirement not to open accounts for high-risk customers.

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The bank had opened more than 54,000 accounts for 49,000 high-risk customers between September 2021 and November 2023, the FCA said. It first identified problems at Starling in 2021 as part of a broader sweep of financial crime controls across the so-called 'challenger bank' sector.

In January 2023, Starling discovered its automated sanctions screening system had only screened customers against a fraction of the full list of individuals subject to financial sanctions since 2017. A subsequent internal review identified systemic issues in its financial sanctions framework, and the bank has since reported multiple potential breaches of financial sanctions to the relevant authorities, the regulator said.

Starling said it “regrets and apologises” for its failings, and has paid the fine as full and final settlement. David Sproul, the bank’s chair, said: “I would like to apologise for the failings outlined by the FCA and to provide reassurance that we have invested heavily to put things right, including strengthening our board governance and capabilities.”